Board OKs increase in Kohl's valuation

Thursday

Jul 18, 2013 at 11:00 AMJul 18, 2013 at 7:27 PM

Despite an appeal by an attorney for Kohl's Department Stores to lower the assessed value of its tangible personal property at the store in Rolla, the Phelps County Board of Equalization Wednesday morning ended up approving an increase to the original assessed valuation.

Paul Hackbarth

Despite an appeal by an attorney for Kohl's Department Stores to lower the assessed value of its tangible personal property at the store in Rolla, the Phelps County Board of Equalization Wednesday morning ended up approving an increase to the original assessed valuation.

The appeal filed on behalf of Kohl's was one of two appeals heard during the board's meeting held in the Phelps County Commission chambers at the county courthouse. However, no one representing Kohl's attended the hearing.

County Assessor Bill Wiggins had set a valuation of the tangible personal property at $402,420.

The appeal filed by John Lentell, attorney for Kohl's, states "the value assessed by the county is greater than the fair market value of the property" and that his opinion of the market value as of Jan. 1, 2013, is $325,924. The Kohl's store in Rolla is located at 2200 N. Bishop Ave., Rolla.

Lentell submitted an appraisal report and case law, and after Wiggins reviewed the items, he recommended the board set the assessed value of tangible personal property owned by Kohl's at $426,710.

Wiggins said the reason for the increase is based on the case law decision, provided by Lentell.

The case law states that if any evidence presented in an appeal for overvaluation leads to a suspicion that the statutory method for determining the value by means of standardized depreciation, it removes any presumption that the statutory valuation model is correct.

Wiggins stated that the statutory model for applying depreciation indicates a reduction in value from the 2012 value, which in this case was the original cost, for five-year-old items at 15 percent and for seven-year-old items at 11 percent.

Wiggins said the appraisal report submitted by Lentell suggests an actual decrease in value of 5 percent to 6 percent. Using the 6 percent reduction, instead of the 15 percent of 11 percent reductions, the value actually resulted in an assessed valuation of $426.710.

All six members of the board of equalization approved the increase. The board members are Presiding Commissioner Randy Verkamp, District One Commissioner Larry Stratman, District Two Commissioner Gary Hicks, County Surveyor Lou Gilbert and citizen representatives Gene Gaddy and Annie Bass.

Family Fitness appeal

The other appeal made at Wednesday's hearings was from Connie Gaddy, owner of Family Fitness Center, 609 W. Eighth St., Rolla. The other owner is Smith Gaddy II, who did not attend.

Gaddy stated in her appeal that she felt the property value was too high and listed the basis for the appeal as the "size of the building and parking lot (is) smaller than what is being assessed."

On this appeal, the opinion of the market value as of Jan. 1, 2013, is $205,000 for the building and the parking lot as compared to $305,000, which is the value that the board of equalization set in 2007 and what Wiggins used for the 2013 assessment of real estate.

"I'm called here to justify a value I didn't set," Wiggins said.

Wiggins noted that the parking lot on the property is included in the 2007 assessed valuation and that he could have added in the value of the concrete, but didn't.

Because the parking lot for the Family Fitness Center is not technically being assessed, it was decided that renders part of the appeal moot.

As far as the building is concerned, Connie Gaddy said that she thought the building was being assessed at 8,000 square feet, but because a racquetball court extends into the second floor and cannot be used as floor space, she feels the actual square footage of the building is 7,166.97 square feet.

Wiggins noted that according to his calculations, the adjusted area of the building is 7,286 square feet, which includes 4,048 square feet on the first floor and 3,238 square feet on the second floor, so he said the racquetball court space was taken into account.

Additionally, Connie Gaddy noted that her real estate taxes on the property had increased by 79.9 percent from 1994 to 2012, however Wiggins said the increase is due to the real estate levy rising.

According to Connie Gaddy, the building was designed for use as a fitness center, but said since other fitness centers have opened and "invaded the market," it has made the "current market undesirable for further expansion."

She said in talks with Wiggins, it was stated that the property could be converted to a student apartment complex. However, Connie Gaddy said that would be cost prohibitive to her in terms of income obtained from rent and the expenses of cleaning up and maintaining the apartments.

At this point in the discussion, Verkamp asked if the potential use of a building is appropriate to be discussing when the valuation of the building is being determined as of Jan. 1, 2013.

"If you go with an income-based approach (to assessing valuation), you can't look at that as a fitness center," Wiggins responded.

Verkamp said then that opens up tons of possibilities as to the use of a building.

Wiggins said, "I'm called to set a value that if there is a willing buyer and a willing seller. That's the value I put on it."

Stratman said he felt there was no basis to change the assessed value and a motion was made and approved to make no change to the value. All voted in favor except for Gene Gaddy who abstained. Gene Gaddy did not give a reason for his abstention.

If Smith and Connie Gaddy or Kohl's does not agree with the decisions made by the board of equalization, they have the option to appeal to the State Tax Commission of Missouri.

Also, the board of equalization unanimously approved the following changes in valuation to four other properties as recommended by Wiggins. All of the changes were decreases in assessed valuations.

The four properties are Comfort Suites (-$109,180), Economy Inn in St. James (-$21,790), Rustic Motel (-$11,640) and Lisa A. Carter Revocable Trust (-$1,670).